ampropilot2b
Well-known member
- Joined
- Dec 5, 2003
- Posts
- 58
Flopgut: You assume that the status-quo is an option. Unfortunately, from a practical perspective, you don't get to make that choice. This decision to enter into a merger transaction is management's to make. I commend CAL ALPA on the strength of their scope. Unfortunately, having a historically strong scope doesn't mean you don't have to spend bargaining capital now and in the future to sustain it.
Your company may be merging with a company that has existing contracts worth hundreds of millions (perhaps billions) of dollars to outsource 70 seat jets. So what are your choices? You can keep your scope, but that several hundred million will come from somewhere. Suppose the 70 seat contracts are worth $750 million. You will pay a premium to cancel them, since the company would be subject to litigation as well as significantly increased operating costs. So what are you willing to spend to cancel those contracts and dial back the scope clause? $1 Billion? I don't think ALPA has $1 Billion in bargaining capital in this situation. My understanding is that the combined company is planning to spend ~$500 million to appease labor during the merger.
Despite our best hopes, this is a bargaining process. The company has to give up something, and so does labor. Sure, the balance may be lopsided from time to time (C2000, Bankruptcy, etc) but eventually things return to equilibrium. It is tempting to believe that ALPA holds all the cards now, and that the company should give the pilots everything they ask for. That type of thinking is what causes the massive peaks and troughs in this career.
Clearly, CAL and UAL ALPA can accomplish a lot given their strong bargaining position. But don't forget the value of the merger to your career. The merger makes sense for the long term viability and quality of career for most of the pilot group at the combined company. CAL seems to have bright prospects for now, but don't kid yourself-so did every other airline now on the trash heap of history. You want management to act aggressively and capitalize on opportunities for growth and cost savings like this merger, otherwise they start looking to labor to make up the difference. Given the rumored structure of the proposed merger, the companies can combine relatively inexpensively at the beginning of an economic recovery. Truthfully, this is the best combination CAL can ever hope for and the timing couldn't be better. If CAL ALPA stops the merger now, they may be forced to revisit a less favorable merger in the future under worse terms. You can prevent further growth of 70 seaters at the combined company and achieve a significant improvement in QOL and pay. But dialing back scope would cost more than any pilot is willing or should be willing to pay.
Your company may be merging with a company that has existing contracts worth hundreds of millions (perhaps billions) of dollars to outsource 70 seat jets. So what are your choices? You can keep your scope, but that several hundred million will come from somewhere. Suppose the 70 seat contracts are worth $750 million. You will pay a premium to cancel them, since the company would be subject to litigation as well as significantly increased operating costs. So what are you willing to spend to cancel those contracts and dial back the scope clause? $1 Billion? I don't think ALPA has $1 Billion in bargaining capital in this situation. My understanding is that the combined company is planning to spend ~$500 million to appease labor during the merger.
Despite our best hopes, this is a bargaining process. The company has to give up something, and so does labor. Sure, the balance may be lopsided from time to time (C2000, Bankruptcy, etc) but eventually things return to equilibrium. It is tempting to believe that ALPA holds all the cards now, and that the company should give the pilots everything they ask for. That type of thinking is what causes the massive peaks and troughs in this career.
Clearly, CAL and UAL ALPA can accomplish a lot given their strong bargaining position. But don't forget the value of the merger to your career. The merger makes sense for the long term viability and quality of career for most of the pilot group at the combined company. CAL seems to have bright prospects for now, but don't kid yourself-so did every other airline now on the trash heap of history. You want management to act aggressively and capitalize on opportunities for growth and cost savings like this merger, otherwise they start looking to labor to make up the difference. Given the rumored structure of the proposed merger, the companies can combine relatively inexpensively at the beginning of an economic recovery. Truthfully, this is the best combination CAL can ever hope for and the timing couldn't be better. If CAL ALPA stops the merger now, they may be forced to revisit a less favorable merger in the future under worse terms. You can prevent further growth of 70 seaters at the combined company and achieve a significant improvement in QOL and pay. But dialing back scope would cost more than any pilot is willing or should be willing to pay.
